The E*TRADE Baby Slips

January giveth, but Feburary taketh away.

Last month's Super Bowl ads may have helped E*TRADE (Nasdaq: ETFC  ) add thousands of net new brokerage accounts, but its account holders weren't busy buying or selling.

The discount broker posted a 20% sequential dip in daily average revenue trades for the month of February. The showing fell 15% below its year-ago numbers. Rival TD AMERITRADE (Nasdaq: AMTD  ) confirmed the apathy, posting an 18% sequential dip. Charles Schwab (Nasdaq: SCHW  ) kicked off the pity party last week, announcing a 15% sequential slide.

Traders seemed poised for a rebound earlier this year. E*TRADE, TD AMERITRADE, Schwab, and Interactive Brokers (Nasdaq: IBKR  ) saw huge sequential spikes in daily average revenue trades in January -- up 21%, 22%, 23%, and 24% respectively.

Brisk trading in January and favorable implications behind Fed actions in February found Goldman Sachs warming up to the sector. The megabrokerage had previously talked down the price targets of Schwab, E*TRADE, TD AMERITRADE, TradeStation (Nasdaq: TRAD  ) , and optionsXpress (Nasdaq: OXPS  ) back in December.

Trading is supposed to be volatile, and one can argue that broad market declines in January jolted passive investors into action. Once stocks began to inch higher again, it seems that discount brokerage clients tapped the snooze bar and went back to sleep.

Clearly, the discounters would prefer not to see trading activity spike only when there's an exodus. It would be refreshing for trading activity pick up during what has been a somewhat smooth March. At least February's weakness gives the sequential metric a bit of a sandbag. It may be harder to compete year over year, since last March marked the bottom of stocks' slide before they began their torrid run upward over the past year.

So thanks for nothing, February. Bring on March!

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optionsXpress, Interactive Brokers, and Charles Schwab are Motley Fool Stock Advisor selections. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz believes in self-service gasoline pumps and self-service stock brokerages. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy installs safety gates on all staircases.


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  • Report this Comment On March 17, 2010, at 7:39 PM, plange01 wrote:

    etrade along with sirius,blockbuster,rite aid,hertz,moodys,kodak and hundreds more are lining up at bankruptcy court...

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